Globes reports that Genesis partners is getting ready to raise a fourth fund of $150 million in addition to its $518 million under management. I wonder how the timing will affect their level of success. There’s a saying in Heberew: an Optimist is a Pesimist with no prior experience.
On one hand, Genesis recently marked an impressive exit of four or fivefold return on the money, with the sale of portfolio company Kidaro to Microsoft for $80-100 million, in addition to several more successful exits in the past couple of years.
On the other hand, the dollar is the weakest it’s been a few years, the markets are slowing, and it’s hard to see past the mountains right now. It’s not necessarily that things are so bad, but the levels of uncertainty are too high to make a risky move these days.
My friend Shahar Nechmad told me an interesting story today. He went to Sand Hill Road a took a taxi from the Caltrain station in Menlo Park. The taxi driver complained that he almost didn’t have any work in the past couple of months. I don’t know if it’s any indication, but sounds like that the VCs in Silicon Valley are just waiting to see what lurks beyond the next turn. Another friend who met with VCs in the valley recently, told me that some of them instructed their portfolio companies to freeze hiring. So overall, thinks are definitely in the fog.
Are Israeli VCs the next victims of the Financial Crisis?, asks Israeli stock trader Aaron Katzman on Israelnewsletter today. According to Katzman, Israeli publicly traded companies in the US have basically mismanaged their cash and have had to write down large amounts of their cash reserves. There is a danger that VC oversight, might have caused Israeli startups to share the same faith. Startups that didn’t have access to their cash, were exposed to losing 20% of their investments, that serve to cover operating costs. If this is the case Katzman says: “the Israeli VC industry may just grind to a halt”.
Genesis founder and managing partner Dr. Eyal Kishon, talked to Globes about the plans for the fourth fund:
“The new fund will be similar in size to the previous funds. We will continue to work with a strategy similar to that of the previous funds, which as far as we are concerned has proved itself: investing in companies at early stages, especially in companies that aspire to make a big change. The companies we have already set up and invested in are responding well, we have a varied portfolio, and we aim to assemble another one like it. As far as areas of investment are concerned, with Genesis 3 we started to invest in electronic consumer products, media, and solar energy. I believe that we will continue to innovate, because this is a field that doesn’t stand still.”
Genesis hopes to raise the capital quickly and join Pitango and Carmel who have both raised new funds relatively quick in the past six months. Otherwise, it might find itself in the same breath with Walden Israel, who recently closed shop after an unsuccessful fund raising round.